¶1
Teton Cooperative Canal Company (Teton Canal) appeals a
January 31, 2017 order of the Montana Water Court in Case
41O-132, adjudicating Teton Canal's water rights on
remand from an earlier decision of this Court. Teton
Cooperative Reservoir Company (Teton Reservoir)
cross-appeals. We affirm.

¶2
We restate the issues on appeal as follows:

1. Whether the Water Court erred by apportioning volume
limits for Teton Canal's 1890 water right claims and the
junior 1936 Eureka Reservoir claims;

2. Whether the Water Court erred by removing the Eureka
Reservoir as storage under the 1890 Notice while allowing the
Glendora Reservoir's storage capacity to be added to the
volume limit under the 1890 Notice;

3. Whether the Water Court erred by permitting Teton
Canal to store its 1890 direct flow water in the Eureka
Reservoir during irrigation season;

4. Whether the Water Court erred by allowing Teton Canal
a year-round period of diversion for the 1890 Notice.

FACTUAL
AND PROCEDURAL BACKGROUND

¶3
This is the second appeal filed in this case concerning the
adjudication of Teton Canal's water right claims on the
Teton River. See Teton Coop. Canal Co. v. Teton Coop.
Reservoir Co., 2015 MT 344, 382 Mont. 1, 365 P.3d 422
(hereinafter Teton Canal I). Teton Canal I
was an appeal from a comprehensive order the Water Court
issued on February 3, 2015, adjudicating the elements of
Teton Canal's water rights in the Eureka Reservoir. We
held in Teton Canal I that Teton Canal's claims
for the Eureka Reservoir were not properly administered under
its 1890 Notice of Appropriation (1890 Notice). Teton
Canal I, ¶¶ 43, 54. We set forth in detail
Teton Canal's historical background and the early
development of Teton Canal's water rights and the Eureka
Reservoir. Those facts are not repeated. We describe here
additional facts relating to volume and period of diversion
relevant to the issues now on appeal.

¶4
Teton Canal's predecessors claimed 3, 000 miner's
inches of the Teton River for irrigation and for gathering in
a reservoir. In March 1899, Teton Canal's predecessor,
Montana Land and Water Company (MLWC), filed a complaint in
District Court to adjudicate its water rights on the Teton
River. MLWC asserted in its complaint that it owned 8, 000
acres of agricultural land in Teton County. The District
Court decreed a water right of 3, 000 miner's inches to
MLWC. MLWC v. Farmers Coop Canal Co., Case No. 209
(Mont. 11th Judicial Dist., June 10, 1901).

¶5
Teton Canal's water rights were again adjudicated in
Perry v. Beattie, Case No. 371 (Mont. 11th Judicial
Dist., March 28, 1908). In the Perry case, Russell
Shepherd, MLWC's successor, claimed water rights under
the 1890 Notice and an 1891 Notice.[1] Shepherd claimed ownership
of the same 8, 000 acres of land identified in the
MLWC litigation. By the time the District Court
issued its decree in Perry v. Beattie, Shepherd had
transferred ownership of the 1890 Notice to Teton Canal. The
Perry Court decreed 3, 000 miner's inches under
the 1890 Notice to Teton Canal.

¶6
We held in Teton Canal I that the 1890 Notice was
specific to the Glendora Canal and Glendora Reservoir.
Teton Canal I, ¶ 37. The Glendora Reservoir is
no longer used by Teton Canal but is owned and operated by a
Teton Canal shareholder. The Water Court found that in 1892,
Glendora Reservoir's surface area was approximately 47.45
acres. In 1910, the reservoir's surface area remained the
same and the dam was recorded as 450 feet long and five feet
high. The Water Court also found that Glendora Reservoir
stored water for Teton Canal until the development of the
Eureka Reservoir.

¶7
Teton Canal, jointly with the State Water Conservation Board,
developed the Eureka Reservoir from 1936 to 1937. On December
3, 1936, the Board filed a declaration of intention to store,
control, and divert water (1936 Declaration). The 1936
Declaration was filed for record on December 7, 1936. The
Water Court found that upon the Eureka Reservoir's
completion in 1937, Teton Canal moved its water storage from
Glendora Reservoir to Eureka Reservoir. The Eureka Reservoir
originally had a storage capacity of 4, 000 acre feet. In
1947, the dam was expanded to increase the Eureka
Reservoir's storage capacity by 750 acre feet. In 1957,
the dam's storage capacity was expanded again by 750 acre
feet. The present capacity is 5, 500 acre feet. Accordingly,
development of the Eureka Reservoir allowed Teton Canal to
store more water.

¶8
The Water Court found no credible evidence showing that any
water was stored at the Eureka site before the Reservoir was
developed in 1937. Teton Canal's shareholder minutes do
indicate, however, that off-season diversion occurred in
1923, 1924, and 1933, well before Eureka Reservoir was added
to the system. The Water Court found no evidence to determine
the nature or extent of Teton Canal's off-season
diversion prior to 1963. A Water Commissioner began recording
the period of Teton Canal's water diversions in 1963. The
Water Court found that the post-1963 Water Commissioner
records offered significant information supporting a
year-round period of diversion, as well as evidence of
historical use.

¶9
There likewise is no record of annual volumes prior to 1963.
Teton Canal's expert, John Westenberg, testified that the
Water Commissioner's records supported 12, 000 acre feet
for Teton Canal's irrigation water right claims and 14,
000 acre feet for all of Teton Canal's water right
claims. On September 28, 2012, Teton Canal and Lower Teton
Joint Objectors entered a stipulation (Stipulation) for the
purpose of resolving Lower Teton Joint Objectors'
objections, "avoid[ing] unnecessary litigation[, ] and
to describe the historic use of [Teton Canal's] water
right claims."[2] The Stipulation called for an additional
2, 000 acre feet as a high-water irrigation claim available
in high water years.[3] Further, Teton Canal limited its
irrigation water right claims to 7, 650 acres within its
claimed overall 17, 322-acre place of use. Based in part on
the Stipulation, the Water Court held in its February 3, 2015
Order that Teton Canal's six claims comprised a total
volume of 14, 000 acre feet.

&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&para;10
In Teton Canal I, we held that: (1) the 1890 Notice
was specific to the Glendora Canal and Glendora Reservoir;
(2) Teton Canal could not claim the Eureka Reservoir under
the 1890 Notice; and (3) the Eureka Reservoir could not
relate back to the 1921 Notice because Teton Canal and its
predecessors failed to proceed with reasonable diligence in
developing the Eureka Reservoir. We remanded to the Water
Court to assign a priority date to Teton Canal's Eureka
...

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